National Technical Systems Announces Fiscal 2006 First Quarter Results

CALABASAS, Calif.--(BUSINESS WIRE)--June 13, 2005--National Technical Systems, Inc. (Nasdaq:NTSC) (NTS) today announced results for its fiscal 2006 first quarter ended April 30, 2005. Net income for the quarter increased 38% to $734,000 as compared to $533,000 for the same period in the prior year with corresponding earnings per share of $0.08 in the current period compared to $0.06 the same quarter in the prior year. The improvement in earnings resulted from a strong performance in the Engineering & Evaluation segment during the current quarter.

Total revenues for the first quarter of fiscal 2006 were $27.4 million, compared to $27.5 million for the same period in the prior year. Gross profit increased 9.3% to $6,598,000 in the current quarter compared to $6,038,000 for the same period in the prior year and operating income increased 59.6% to $1,460,000 in the current quarter compared to $915,000 for the same period in the prior year.

Sequentially, total revenues in this fiscal year\'s first quarter increased 8% from fiscal 2005 fourth quarter levels and net income increased 25% to $734,000 in this quarter compared to $588,000 in fiscal 2005 fourth quarter and earnings per share increased to $0.08 in the current period compared to $0.06 in fiscal 2005 fourth quarter.

Revenues from Engineering & Evaluation for the fiscal 2006 first quarter were $17.3 million, compared to $15.9 million for the same period in the prior year. This year-over-year increase of 9% was primarily due to increased revenues in the defense, aerospace and automotive markets and additional revenues of $575,000 from the acquisitions of the telecommunications test laboratories in Calgary, Canada in August 2004 and Santa Rosa, California in March 2005.

Gross profit as a percentage of revenues for the first quarter of fiscal 2006 for Engineering & Evaluation was 29.1%, compared to 26.9% for the same period in the prior year. Operating income for the fiscal 2006 first quarter increased 77% to $1,409,000 compared to $796,000 for the same period in the prior year.

Revenues from Technical Solutions for the fiscal 2006 first quarter were $10.2 million compared to $11.6 million for the year-earlier period. The decrease in revenues was due to competition from off-shore companies and the loss of certain customers in geographic areas where the Company discontinued its sales and marketing efforts. Operating income for the fiscal year 2006 first quarter for Technical Solutions was $51,000, compared to $119,000 for the year-earlier period.

CEO William C. McGinnis commented, "We are very encouraged by the strong performance trends in the Engineering and Evaluation group. We are seeing increased activity in almost all markets served by this group. Our Calgary acquisition is performing better than anticipated and we are extremely pleased with our recent acquisition of Phase Seven laboratories and the potential growth it will bring to the Company in the telecommunications arena. We continue to seek opportunities internationally, as we look to expand our service offerings to product manufacturers in Taiwan, Hong Kong, South Korea and mainland China. In addition, we continue to enhance our military testing capabilities, especially at our Camden, Arkansas facility, to take advantage of increased activity in the defense business."

Conference Call

NTS is conducting a conference call to review the financial results today at 11:00 AM Pacific Time (12:00 PM Mountain Time, 1:00 PM Central Time, 2:00 PM Eastern Time). The dial-in number for the call is 1-800-219-6110. A live web cast of the call can be accessed at

About National Technical Systems, Inc.

National Technical Systems, Inc. is a business-to-business services company providing organizations in the aerospace, defense, information technology (IT) and high technology markets integrated testing, certification, quality registration, systems evaluation and engineering solutions. For additional information about National Technical Systems, visit its web site at

Cautionary Note Regarding Forward-Looking Statements:

The statements in this press release that relate to future plans, events or performance, are forward-looking statements that involve risks and uncertainties, including risks associated with uncertainties pertaining to customer orders, demand for services and products, development of markets for the companies\' services and products and other risks identified in the companies\' SEC filings. Actual results, events and performance may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The companies undertake no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Unaudited Condensed Consolidated Statements of Income
for the Three Months Ended April 30,

2005 2004
------------ ------------

Net revenues $27,444,000 $27,472,000
Cost of sales 20,846,000 21,434,000
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Gross profit 6,598,000 6,038,000

Selling, general and administrative expense 5,215,000 5,156,000
Equity (income) from non-consolidated
subsidiary (77,000) (33,000)
------------ ------------
Operating income 1,460,000 915,000
Other income (expense):
Interest expense, net (318,000) (252,000)
Other - 152,000
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Total other expense (318,000) (100,000)
------------ ------------

Income before income taxes and minority
interest 1,142,000 815,000
Income taxes 400,000 328,000
------------ ------------

Income before minority interest 742,000 487,000
Minority interest (8,000) 46,000
------------ ------------

Net income $734,000 $533,000
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Net income per common share:
Basic $0.08 $0.06
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Diluted $0.08 $0.06
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Weighted average common shares outstanding 9,052,000 8,874,000
Dilutive effect of stock options 494,000 726,000
------------ ------------
Weighted average common shares outstanding,
assuming dilution 9,546,000 9,600,000
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    CONTACT: National Technical Systems, Inc.
Lloyd Blonder, 818-591-0776
BPC Financial Marketing
John Baldissera, 800-368-1217 or 949-474-4300

SOURCE: National Technical Systems, Inc.